South African Reserve Bank Lowers Inflation Target, Cuts Key Rate Without Minister Approval

South Africa's central bank has lowered its main lending rate by 25 basis points to 7.00% and announced it will now target 3% inflation, aiming for the bottom of its previous 3%-6% target range. This move reflects the central bank's view that the existing inflation target band is too wide and harms the country's economic competitiveness. Although Finance Minister Enoch Godongwana has not officially approved the target change and prefers a cautious approach, the Reserve Bank's Monetary Policy Committee acted independently to lock in gains and support economic stability. South African government bonds strengthened following the announcement, signaling positive market reaction to the commitment towards a lower inflation goal. The central bank governor emphasized that policy decisions carry costs either way, and delaying action is not costless. The Treasury has stated it will address any formal comments on the inflation target in upcoming budget meetings and not through the media.